SECRET
But
government considered it should be sufficient to maintain the confidence of investors. Lord Carrington said that the proposal we made had not necessarily been the right one. the problem could not be dealt with entirely by general assurances. Sir E Youde explained that mortgages in Hong Kong were normally for 15 years. A problem would arise in 1982 because of the expiry of the New Territories Lease in 1997. The immediate question was how to deal with the practical problem of individual land leases.
GUANGDONG NUCLEAR PROJECT
4.
Lord Carrington said that there was a project for a nuclear power station in Guangdong province near to Hong Kong which we had been studying with considerable interest. What was the Chinese government's attitude ? Huang Hua replied that Peking were aware of the contacts which had taken place between the Guangdong authorities and China Light and Power and supported the idea of exploratory discussions. Other people were seeking the same opportunities as the British in this area. Lord Carrington said he was not asking who was to be awarded the contract but whether the project itself had the support of the Chinese government. Huang Hua said that there had already been some discussion with the French about the possibility of nuclear power generation in Guangdong. He understood that they were interested in taking part in the project. Lord Carrington said there were two separate matters: the nuclear reactor and the non-nuclear plant. the decision was in favour of a PWR, British companies would not be in a position to tender for the reactor. But we certainly hoped to supply non-nuclear hardware if the project went ahead. Mr McLaren added that part of the electricity generated would be sold to Hong Kong. Huang Hua nodded but said he was not familiar with the details. Lord Carrington noted that a delegation from Guangdong was currently in the UK. The Chinese Ambassador said that it was here to explore possibilities; it had no authority to take decisions.
AIR SERVICES
5.
If
Lord Carrington said that he also wished to raise a matter concerning the Air Services Agreement (ASA) signed during Premier Hua's visit last year. He asked Sir E Youde to explain the problem. Sir E Youde said that the ASA had not yet been implemented in full because of a difference over the Hong Kong-Shanghai route. By agreeing to the start of services for CAAC between 3 other Chinese cities and Hong Kong, we had fulfilled our commitments under the ASA. We hoped that the Chinese would now do the same by accepting our designation of HKA on the Shanghai route. Huang Hua (who was clearly unbriefed on the details) asked whether the start of services on the trunk route was at issue (he was told it was not) and then referred to the Confidential Memorandum of Understanding. Sir E Youde explained that HKA had been reconstituted following previous Chinese objections. We believed our proposal was reasonable and hoped that the Chinese would now accept it.
SECRET
/6.